Forex market opening hours: best time to trade FX in the US
What are the major forex centers?
The major forex centers around the world are New York, London, Tokyo and Sydney, and it is the different locations of these major centers that makes forex a 24-hour market. Forex is an over-the-counter market, meaning that there is no centralized forex exchange. Instead, forex trading is made possible through an international web of banks, brokers and market makers.
Forex trading hours: when does the forex market open?
While the forex market is open 24 hours a day, five days a week, each day is broken up into several sessions. The Asia-Pacific session opens first, followed by the European (London) session, and then finally, North America.
The forex trading hours of each session can be seen below:
- Sydney – opens at 3pm and closes at 12am (EST)
- Tokyo – opens at 7pm and closes at 4am (EST)
- London – opens at 3am and closes at 11am (EST)
- New York – opens at 8am and closes at 5pm (EST)
It is important to remember that forex trading hours can vary in March, April, October and November, as countries shift to and from daylight savings or summer times on different days.
Why are the forex market’s trading times important?
The forex market’s trading times are important because, although it is open 24 hours a day, the market is more active during different sessions, or when there is a crossover between two sessions in different geographic locations, which means that spreads are tighter.
However, this increased activity is typically confined to currencies that are found in both locations of a crossover – for example, GBP/USD experiences greater trading volume when both the European and US sessions are open between 8am and 11 am (EST).
The beginning of each trading session is when the big institutions such as investment banks are active, and this is often when relevant economic data for each session is published.
When is the best time to trade forex in the US?
Typically, the US forex market is most active just after the open of the New York session at 8am (EST). At this time, liquidity and volatility will likely be high as traders begin opening and closing their positions according to the market news for that morning.
Trading forex during the New York session
The New York session has the biggest overlap with the London session, so the GBP/USD cross can be highly liquid. The New York session is the last trading window to close on the 24-hour forex trading clock, and it often experiences high trading volume, as traders seek to squeeze the last bit of profit out of that trading session’s news announcements. Many USD crosses experience their highest trading volumes during the New York session.
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Trading forex during the London session
Popular forex pairs to trade during the London session are the majors such as the GBP/USD cross or the EUR/GBP cross. This is especially true during the overlap between the London and New York markets, as well as the European session which is open during almost identical hours to the London session.
The Tokyo-London crossover is historically not as busy as the London-New York crossover because of the simple fact that there are fewer hours in which the two sessions are open simultaneously.
Trading forex during the Tokyo session
The Tokyo session enjoys a large overlap with the Sydney session, with the two centers being open for five hours simultaneously between 7pm and 12pm (EST). Pairs such as USD/JPY or EUR/JPY are popular during the Tokyo session. There is also a lot of liquidity and volatility in the AUD/JPY currency pair during the cross over between the Sydney and Tokyo session, which is one of the most volatile currency pairs on the market and the second most traded JPY cross behind USD/JPY.
How to trade forex
The most popular way to trade forex is through derivatives, including a rolling spot forex contract offered by tastyfx. Trading with derivatives enables you to speculate on an asset’s price movements without taking direct ownership of it.
For example, when trading forex with tastyfx, you can bet on whether a currency pair’s price will increase or decrease by going long as well as short with derivatives. The extent to which your prediction is correct determines your profit or loss.
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How do trading hours and time zones affect individual forex pairs?
Some forex pairs will be more heavily affected by an overlap than others. For example, EUR/USD and GBP/USD will see increased activity as New York gets into its stride while London is still fully active.
Typically, a forex pair has greater liquidity when at least one of its markets is open – USD/JPY will be busiest during the Asian or US sessions, but less so during the European session. EUR/JPY is more active at the open of the European session, and EUR/USD will not be quite as busy during the Asian session, and so on.
Whichever pair you trade, regardless of whether it is one of the biggest and busiest, or one of the more ‘exotic’ ones, it is important to know what financial data is about to be published, and which sessions are likely to be the most volatile. Traders can then look to trade within either the volatile or quiet periods, with both approaches having their own merits and disadvantages.
As with so many other instances in trading, there is no one ‘perfect’ or best time to trade forex. However, there will be times that are perhaps better than others, or times that will better suit a particular trading style or currency pair.
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What to bear in mind before trading during different forex market hours
Before trading during different forex market hours, you should remember that liquidity will be affected by the time of day at which you are trading, and whether there is an overlap between sessions.
The geographic areas included in the overlap also affect liquidity. For example, The London-New York overlap is more liquid than the London-Tokyo overlap. The same can be said for volatility levels, with the London-New York overlap usually experiencing increased volatility.
Some traders like high volatility, but others do not. As a result, it is important to have an effective risk management strategy in place while trading during different forex market hours.
This information has been prepared by tastyfx, a trading name of tastyfx LLC. This material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. You should not treat any opinion expressed in this material as a specific inducement to make any investment or follow any strategy, but only as an expression of opinion. This material does not consider your investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. No representation or warranty is given as to the accuracy or completeness of the above information. tastyfx accepts no responsibility for any use that may be made of these comments and for any consequences that result. See our Summary Conflicts Policy, available on our website.
